Mezzanine Financing Comes to LatAm

Nov 1, 2010

Mezzanine financing is not as widely available from private equity firms in LatAm as in other emerging markets. This could start to change soon as both sides learn of the benefits.

by Taina RosaThere are very few private equity firms in
Latin America that have set up mezzanine funds, but more are
expected to join them as the availability of loans from banks
remains somewhat difficult to get for mid-sized companies.
Capital markets in the region are also gaining a higher level
of sophistication.In a nutshell, a provider of mezzanine
financing will usually take a minority equity position in the
target company and structure the rest of its investment as a
loan. "Mezzanine is a product between senior debt and pure
equity," says Lucas de Beaufort, senior associate at Washington
DC-based EMP Global, which has more than $12 billion in assets
under management (AUM).Richard Frank, CEO of US-based Darby
Overseas, which began offering mezzanine financing in LatAm
over 10 years ago, says that at that time there was a shortage
of corporate loan availability to mid-sized companies. "Those
conditions are still...